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Sovereign Wealth Funds: Much Ado About Some Money

According to Kovacs, the name "sovereign wealth fund" is both unfortunate and misleading. The term has endowed SWFs with a special and even threatening aura, even though, under international law, they do not enjoy sovereign immunity, as they are just state-owned entities, along with government-owned airlines, banks, shipping companies, etc.

Kovacs asks, how important in fact are the SWFs? Of course, $3-5 trillion is a lot of money, but it is only a small part of the investment universe. He predicts that in the coming years, SWFs will grow in number and size, probably in an international arena more turbulent than now, and SWFs will continue to favor the major advanced economies, although they are unlikely to become a significant source of FDI.

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